If any money is returned by municipalities it will now be deposited in the trust fund rather than put towards the general fund. The administration says it has identified $165 million to offset the loss, meaning it will have no significant impact on this year’s surplus. (Housing advocates and municipal officials should remain concerned since there the administration could still try to divert the funds this year through legislative authority or an accounting maneuver.)

The Administration states that the loss of this revenue will not have any significant impact the FY 2014 surplus since other budgetary actions including reduced expenditures and lapses will offset the loss of the $165 million and allow the budget to maintain a the projected $300 million surplus.

In addition, the bond offering reveals that the closing surplus for last year’s budget is now expected drop from the projected $467 million to be $300 million after accounting for the loss of the $165 million in housing funds. The administration has not reduced the surplus to a potential level of $196 million, as the administration has found ways to offset a $104 million major tax revenue shortfall.

But that does not mean that this year’s revenue picture has turned rosy. In fact, it means that there could likely be even fewer places for the state to find extra budget savings if this year’s slim projected surplus of $300 million is threatened by any of the following shortfall threats.

Any combination of these items could easily exceed the $300 million projected surplus, and since the administration has already found $165 million to offset the loss of the housing funds, it will have fewer places to look for extra cash.